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Botswana: Economic Outline

Economic Indicators

Botswana has experienced one of the strongest dynamic growth in the world since the 1960s, mainly due to the exploitation of its enormously rich diamond mines (the sector contributes to almost one-third to the GDP and represents 80% of foreign exchange). Affected by the economic crisis, the country has experienced a strong slowdown along with a severe recession. Nevertheless, the growth has rebounded strongly and it keeps again an average level (6.2% in 2011 and the forecast for 2012 is 5.3%). Inflation is decreasing: it should decline from 7.8% in 2011 to 6.2% in 2012.

The country, reputed for its stable political environment, experienced unprecedented problems in 2011. In mid-April, 90,000 civil employees started a strike to demand a raise of 16% to their salaries. With an iron arm, the government remained firm during two months and finally it granted an increase of 3% after having discharged 2,600 public agents and subdued the manifestations.

The priority of the economic policy is the diversification of its economy aiming at reducing its dependence on the public and diamond sectors, considering that the diamond deposits, which represent at the moment almost half of the nation's income, are expected to be depleted in 20 years from now. Nevertheless, the country expects to continue receiving the profits of this same financial wealth because it is planning the exploitation of a new mine during the first semester of 2012. Botswana also counts with its coal reserves. The country's energy power is supplied up to 80% from its South African neighboring country, it is constantly affected by power outages; however, it expects to multiply its production capacity by six thanks to the launching of a new central in 2012.

Botswana aims to achieve a return to a positive trade balance in 2012 after having gone through three years of deficit, mainly due to the global economic crisis and a drop of the income drawn by the Southern African Custom Union. A budget revival program based on the financial aid from the African Development Bank and the World Bank was launched. In the framework of the diversification of its economy, the country also plans to expand the development of services, especially with the creation of “hubs” in the health, education, innovation, financial services and tourism sectors.

Botswana has improved its status from belonging to one the least developed countries to a superior bracket: a middle-income country. However, despite a relative prosperity, the country still has a high level of inequalities: Botswana suffers from a high unemployment rate, lack of skilled labor, 47% of the population lives with less than one dollar per day and one adult out of four is seropositive. 

 

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Indicator of Economic Freedom

Score:

68.8/100

Position:

Moderately free

World Rank:

38/179

Regional Rank:

2/45

Distribution of Economic freedom in the world
Source: 2011 Index of Economic freedom, Heritage Foundation

Note: The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labor freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

 

Country Risk

See the Country Risk Analysis Provided By Ducroire.

 

Indicator of Political Freedom

Ranking:

Free

Political Freedom:

3/7

Civil Liberties:

2/7

Map of freedom 2010
Source: Freedom House

Note: The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

 

Indicator of Freedom of the Press

World Rank:

43/179

Evolution:

19 places up compared to 2010

Source: Worldwide Press Freedom Index 2011, Reporters Without Borders

Note: The world rankings, published annually, measures the violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position is assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire sent to partner organizations,150 RWB correspondents, journalists, researchers, jurists and activists of human rights, including the main criteria - 44 in total - to assess the situation of press freedom in a given country. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

Sources of General Economic Information

Main Online Newspapers and Portals

Allafrica.com, Botswanai news
Afrol, Botswana news
Einnews.com, Botswana news

Useful Resources

Ministry of Finance and Development Planning
Central Bank

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Last Updates: May 2012